Sovereign wealth funds eye Citi’s 12% stake in HDFC
Several investors, including sovereign wealth funds, have expressed interest in buying Citigroup’s 12% stake in HDFC. Citigroup is the single-largest shareholder in HDFC with a 11.74% stake.
By Mayur Shetty, ET Bureau |
MUMBAI: Several investors, including sovereign wealth funds, have expressed interest in buying Citigroup���s 12% stake in HDFC. Citigroup is the single-largest shareholder in HDFC with a 11.74% stake.
Citigroup has acquired its stake in two tranches. There is a 9.11% stake which is held by a Citigroup Strategic Holdings Mauritius and another 2.63% is held by Citigroup Holdings Mauritius. The combined 11.74% stake is worth around Rs 4,649 crore ($928 million). Most of the shares were purchased by Citibank from Standard Life Insurance of the UK at Rs 1,330 against the current market price of Rs 1,399.
���Whenever we have enquired from Citi, they have informed us that they have not considered selling their stake in HDFC,��� said HDFC chairman Deepak Parekh. He added that even without any intent to sell from Citibank, HDFC has been approached by as many as six investors. ���Six
investors have approached us saying that ���we are interested in buying if Citi is selling its stake.��� But we have nothing to tell them as there are no sellers,��� he said. Mr Parekh added that while some investors were interested in only part of the stake, there were others interested in buying the whole stake.
Shares of HDFC have lost a third of their market value, since early November. However, the institution has outperformed the financial sector in the recent crisis, with the scrip falling 55%, since the Sensex closed at its peak in January 8. In the same period, the Bankex, which represents bulk of the market capitalisation in the financial sector, fell 63% and the broad-based Sensex fell 57%.
There has been speculation that HDFC would be impacted by the fall in real estate prices. According to a research report, both CLSA and Reliance Equity placed HDFC���s corporate exposure at around 30%. Loans to builders comprise around 12% of its portfolio. These loans are to large developers, many of whom are under financial strain.
���Land financing has been done by private equity funds, IPOs and funds from qualified institutional placements. We provide construction finance because this gives an opportunity to provide home loans to those who purchase these properties,��� said Mr Parekh. He added that he did not see any increase in HDFC���s provisioning requirements and that existing provisions were three times what was required by the National Housing Bank.
Citigroup has acquired its stake in two tranches. There is a 9.11% stake which is held by a Citigroup Strategic Holdings Mauritius and another 2.63% is held by Citigroup Holdings Mauritius. The combined 11.74% stake is worth around Rs 4,649 crore ($928 million). Most of the shares were purchased by Citibank from Standard Life Insurance of the UK at Rs 1,330 against the current market price of Rs 1,399.
���Whenever we have enquired from Citi, they have informed us that they have not considered selling their stake in HDFC,��� said HDFC chairman Deepak Parekh. He added that even without any intent to sell from Citibank, HDFC has been approached by as many as six investors. ���Six
investors have approached us saying that ���we are interested in buying if Citi is selling its stake.��� But we have nothing to tell them as there are no sellers,��� he said. Mr Parekh added that while some investors were interested in only part of the stake, there were others interested in buying the whole stake.
Shares of HDFC have lost a third of their market value, since early November. However, the institution has outperformed the financial sector in the recent crisis, with the scrip falling 55%, since the Sensex closed at its peak in January 8. In the same period, the Bankex, which represents bulk of the market capitalisation in the financial sector, fell 63% and the broad-based Sensex fell 57%.
There has been speculation that HDFC would be impacted by the fall in real estate prices. According to a research report, both CLSA and Reliance Equity placed HDFC���s corporate exposure at around 30%. Loans to builders comprise around 12% of its portfolio. These loans are to large developers, many of whom are under financial strain.
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���Land financing has been done by private equity funds, IPOs and funds from qualified institutional placements. We provide construction finance because this gives an opportunity to provide home loans to those who purchase these properties,��� said Mr Parekh. He added that he did not see any increase in HDFC���s provisioning requirements and that existing provisions were three times what was required by the National Housing Bank.
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